kawasaki on positioning

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Kawasaki on Positioning

• Craft a good message

• Positioning states:

• Why founders started the organization

• Why customers should patronize it

• Why good people should work at it

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•What do you do?

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• Positive• Customer-centric• Empowering (meaning for employees)• Self-explanatory• Specific• Core (competencies)• Relevant• Long-lasting• Differentiated

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• The name of your business should :• Be first in the alphabet• Avoid numbers, trends, and similar sounding names• Sound logical • Does your name have verb potential ?

• “________________ it.”

• (E.g., Google it)

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• Make your positioning personal (and don’t use jargon)

• “We realize that it’s important that every customer has some control over personal information.”

• V.

• “We give you control over your personal information.”

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• After you tell someone about your business idea – can they explain to you what the idea is without repeating your own wording?

• When you test your product or service, listen carefully, this feedback is helping you to develop your position

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The Entrepreneurial Approach to Resources

• Resources – Networks are everything to the entrepreneur• People, such as the management team, the board of directors,

lawyers, accountants, and consultants• Financial resources• Assets, such as plant and equipment• Business plan

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Relationship with the Board of Directors

• Simple rules for a productive relationship with the board of directors• Treat your directors as individual resources• Always be honest with your directors• Set up a compensation committee• Set up an audit committee• Never set up an executive committee

• Also note use of accountants and lawyers

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Consultants

• Why do startups hire consultants?• To compensate for a lower level of professional experience• To target a wide market segment (possibly to do market

research for a consumer goods firm)• To undertake projects that require a large startup investment

in equipment

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Consultants

• Consider the Gap Analysis exercise and Building your Brain Trust exercises at the end of Chapter 10

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Hiring a Consultant

• Considerations• Not geographically bound• Word of mouth• References• People skills• Professional affiliations

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Financial Resources

• Cash is the lifeblood of the venture

• Computers and spreadsheet programs are tools that save time and increase productivity and creativity.• Answer “what if” questions

• Capital Requirements

• Pro Forma Income Statements

• Balance Sheets

• BudgetingBreak-Even Calculations

• Cash Flow Projections

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Franchising

• An entrepreneurial alliance between two organizations, the franchisor and the franchisee• Franchisor – the concept innovator who grows by

seeking partners or franchisees to operate the concept in local markets

• A large-scale growth opportunity based on a partnership rather than an individual effort

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Assessing a Franchise

• Multiple market presence• Outlet pro forma disclosed or discerned• Market share• National marketing program• National purchasing program• Margin characteristics

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Accessing a Franchise

• Business format• Term of the license agreement• Site development• Capital required per unit• Franchise fee and royalties

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Exhibit 11.3

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Training and Operational Support

• Promotes the standardized, consistent delivery of the product

• Reinforces the brand’s value • Transfers knowledge of the service delivery

system (SDS) to the franchisees, both managers and line workers

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Field Support

• Two forms:• Franchisor’s representative visits the

franchisee’s location in person• Resident experts available for consultation at the

corporate headquarters

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Marketing, Advertising, and Promotion

• Funded and implemented at three levels1. National

• Franchisee contributes a percentage of top-line sales to the fund and typically controlled by the franchisor

2. Regional• Stores within a set area contribute a percentage of

top-line sales to the fund• Controlled by an area of dominant influence (ADI)

advertising cooperative• 3. Local

• Franchisee makes direct expenditures on advertising• Controlled by franchisee but must be within

guidelines set by franchisor

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Exhibit 12.2

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Exhibit 12.3

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Entrepreneurial Finance

• Three core principles of entrepreneurial finance• More cash is preferred to less cash• Cash sooner is preferred to cash later• Less risky cash is preferred to more risky cash

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Exhibit 12.4

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Exhibit 12.5

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Bargaining Power

• Three vital corollaries determining bargaining power• Burn rate• Time to OOC (Out Of Cash)• TTC (Time To Close)

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Free Cash Flow

• The cash flow generated by a company or project is defined as follows:• Earnings before interest and taxes (EBIT)• Less tax exposure (tax rate times EBIT)• Plus depreciations, amortization, and other non-

cash charges• Less increase in operating working capital• Less capital expenditures

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Operating Working Capital

• Operating working capital can be defined as follows:• Transactions cash balances• Plus accounts receivable• Plus inventory• Plus other operating current assets• Less accounts payable• Less taxes payable• Less other operating current liabilities

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Factors Affecting Financing

• Accomplishments and performance to date

• Investor’s perceived risk

• Industry and technology

• Venture upside potential and anticipated exit timing

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Factors Affecting Financing

• Venture anticipated growth rate

• Venture age and stage of development

• Investor’s required rate of return or internal rate of return

• Amount of capital required and prior valuations of the venture

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Factors Affecting Finance

• Founders’ goals regarding growth, control, liquidity, and harvesting

• Relative bargaining positions

• Investor’s required terms and covenants

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Check out these resources

• www.sba.gov• Financing information• Start-up kits/information• Search by zip code

• www.score.org• Service Core of Retired Executives• Search by zip code

• www.scorela.org• SCORE in Glendale

kawasaki on positioning

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